via thehill:
As the country heads towards a debt ceiling showdown later this summer, a dangerous idea is gaining currency. It is that the U.S. Constitution makes debt default impossible. This idea risks breeding complacency among our politicians about the economic and financial market dangers associated with the debt ceiling standoff that lie ahead.
The essence of the idea is that the 14th Amendment to the Constitution unequivocally states that “the validity of the public debt of the United States, authorized by law . . . shall not be questioned.” If the debt ceiling were breached, so the idea goes, the government would be forced to prioritize debt service payment over regular government expenditures to avoid default. It would have no option but to cut back on its other spending to generate the necessary resources to do so.
All is well with this idea except for one thing. Since 1866, when the 14th Amendment was adopted, the U.S. government has defaulted on its debt obligations not once, not twice but at least three times.
The most notable of these defaults occurred in 1933, when President Franklin Roosevelt took the U.S. off the gold standard. During the Great Depression, the White House, Congress and the Supreme Court agreed to wipe out around 40 percent of U.S. private and public debt. The U.S. government did so by simply refusing to redeem its gold bonds into gold coins. Instead, the government repaid its gold bond obligations with depreciated currency.